China: Foreign-Invested Firms Make Up 52% of Imported Palm Oil

China is the world’s largest consumer of Oilseeds Oil and cooking Oil, consuming 158 million tons in 2018, 60% of which was imported. Soybean Oil (42%), rapeseed Oil (25%), and Palm Oil (14%). China is the fourth largest consumer of Palm Oil, following Indonesia, India, and the EU, and the third largest importer, after India and the EU.

Trading is concentrated in a small number of large and vertically integrated agrifood companies. It has been estimated that in 2015, only 147 companies imported Palm Oil and Palm Oil products into China. Among the top 10 trading companies, the first two players, by a large margin, are Yihai Kerry and Cargill. Wilmar International Limited backs the former. These companies are usually vertically integrated, managing imports and trading facilities and Oil refineries, food factories, personal care products, cosmetics, and detergent manufacturing plants.

Geographically, the top importing companies – as with the leading refining and processing plants – are concentrated in south and southeast China, with a small presence in north China. According to China’s General Administration of Customs (national Palm Oil import distribution data), in 2015, imports at the ports of Nanjing, Huangpu, and Tianjin accounted for around 72% of total national imports, with the port of Guangdong ranking first in terms of imported volume, handling 1.86 million tons of Palm Oil.

Foreign investment enterprises accounted for 52% of the total imported Palm Oil, with imports from Chinese private enterprises accounting for about 30% and state-owned companies approximately 10%. Consolidation in the sector has been a dominant trend: the proportion of annual imports by the top 10 importing companies increased from 44% to 53% in the recent years.

The leader among Chinese companies is COFCO (China National Cereals, Oils and Foodstuffs Corporation), the largest state-owned supplier of diversified products and services in the agricultural and food industries, followed by Sinograin Oils Corporation, a state-owned company. COFCO handles around 210,000 tons of Palm Oil annually (RSPO ACOP 2017), around 4% of China’s Palm Oil imports.

China’s global Palm Oil value chain reflects that of the global market. From the highly-concentrated trading sector to the plethora of manufacturers and retailers, more than 5,000 enterprises are known end-users of Palm Oil. According to AgFlow data, China imported 80,555 tons of Palm Oil from Indonesia in July – Aug 2023, followed by Malaysia (8,200 tons).

Imported Palm Oil is mainly used for food, either as a cooking Oil or as an input for processed food, and in smaller amounts for cosmetics, cleaning products, and biofuel. The CFNA (2016) reports that Palm Oil consumption in the food industry was about 4.3 million tons in 2015, accounting for 75% of China’s total Palm Oil consumption. Around 890,000 tons were used to produce daily-use chemicals, around 15% of total Palm Oil consumption.

In the food industry, instant noodles dominate the market as a single product, accounting for 27% of Palm Oil consumption in food. At the industrial level, Palm Oil is most widely used as a frying Oil for instant noodles, fried chicken products, potato snack foods, or traditional Chinese snacks, and as a baking Oil for margarine and refined Oil and processed foods, such as bread, cakes, biscuits, cookies, pies, fried doughnuts, etc.

Sustainable Palm Oil in China

Despite its significant growth, sustainable Palm Oil remains a niche market. The best example of this is the instant noodles sector, where no player has yet declared a commitment to sustainable Palm Oil. The leading company, Master Kong, is estimated to handle around 400,000 tons of Palm Oil each year, making it China’s most significant single consumer.

Sustainable Palm Oil is a relatively new concept in China. There is evidence that Chinese companies seldom take the initiative to purchase CSPO, mainly when dealing with the domestic market. The volumes of CSPO handled are insignificant, and further action to engage Chinese stakeholders is needed to make a dent in the market. That said, Chinese companies’ understanding of sustainable Palm Oil.

Other sources: UNDP